Death in service grant

A benefit of the LGPS scheme is that a lump sum may be available when you die.

A death grant is paid if you are under age 75 when you die and you either:

• were still paying in the LGPS
• had left the LGPS but not taken payment of your pension
• had left after 31 March 2008 and had been receiving your pension for less than 10 years
• had left the LGPS between 1 April 1998 and 31 March 2008 and had been receiving your pension for less than 5 years

If you left before 1 April 1998 and are receiving your pension, a death grant may be paid when you die.

Let us know who you would like any death grant paid:

• on My Pension Online
• by completing an Expression of wish form PDF, 565 KB

We can normally pay the death grant straight to your nominated person(s) without waiting for probate.

The tax office may consider the money excluded from your estate and not deduct any inheritance tax. However, if you do not make a nomination, we may have to pay your death grant into your estate.  In this case, and it will be dealt with according to the terms of the law. We advise pensioners to consult a solicitor if you are unsure of what to do.

In some cases we may not be able to pay the death grant to the nominated person or organisation. This could be because:

• the nominated person has died
• the chosen charity is now defunct
• the nominated person is no longer your spouse/partner/civil partner/cohabiting partner
• the Pensions Administration Manager considers that it wouldn't be reasonable to pay the death grant to the nominated person or charity due to the particular circumstance

This will depend on if at the time of your death you were:

• still paying into the scheme (active member)
• no longer paying in but had not yet retired (deferred member)
• receiving pension payments (pensioner member)

If you die in when you are still paying into the LGPS, a lump sum death grant of three times your assumed pensionable pay is paid.

If you also have a pension from a previous period of membership of the LGPS, the lump sum death grant paid is the greater of:

• the total of any lump sum death grants payable from the deferred pension or pension in payment
• three times your assumed pensionable pay at the date you die

Where an independent registered medical practitioner certifies that, during the period used to determine assumed pensionable pay, you were working reduced contractual hours because of the ill-health which led to death in service, the assumed pensionable pay is calculated on the pay you would have received during that period had you not been working reduced contractual hours.

If you leave your LGPS employment after paying in for more than 2 years, you may have deferred benefits.

If you die after leaving the LGPS and before you take your pension, the lump sum death grant payable depends on when you left:

• if you left after 31 March 2008, five time your deferred annual pension is paid
• if you left before 1 April 2008, three times your deferred annual pension is paid

However, if you leave the Buckinghamshire LGPS and die whilst paying into another LGPS employer's scheme, the death grant payable is the higher of:

• your deferred death grant as calculated above
• three times your assumed pensionable pay in your active employment

If you hold more than one deferred benefit in the LGPS a death grant will be paid from each deferred benefit, provided you are not also an active member of the LGPS.

The amount you will receive if you die whilst receiving your LGPS pension, depends on when you retired:

If you stopped paying into the LGPS on or after 1 April 2008, the death grant is 10 years annual pension, minus what has already been paid to you.

If you stopped paying into the LGPS between 1 April 1998 and 31 March 2008, the death grant is 5 years annual pension, minus what has already been paid to you.

If you stopped paying into the LGPS before 1 April 1998, there may be a death grant payable if:

• you have less than 10 years reckonable service used in the calculation of your pension, but you have had your pension in payment for less than 5 years
• you have more than 10 years reckonable service used in the calculation of your pension

If you would like an estimate of your death grant, contact us:

• Email: [email protected]
• Telephone:  01296 383 755

If you paid AVCs and were a member of the LGPS on or after 1 April 2014, your local pension fund will use its discretion to decide who receives any lump sum due from your AVC pot when you die.

If you left the LGPS before 1 April 2014, your local pension fund must pay any lump sum due to your estate.

When you die, your surviving partner or dependants might be eligible for a pension.

The government limits the total amount of tax-free lump sums and death benefit lump sums that can be paid in respect of someone's pension benefits to £1,073,100.

This is known as the Lump Sum and Death Benefit Allowance (LSDBA). When a member dies, the person dealing with their financial affairs is responsible for checking that the member has not exceeded the LSDBA.

If exceeded, they will need to report this to HMRC and pay the tax charge due.

View Tax controls on pensions - Lump Sum and Death Benefit Allowance for more information.